Pakistani rupee continued making slight gains against the US dollar in the interbank market for the 12th consecutive week and improved by Rs0.18.
According to details, the rupee opened at 279.59 against the greenback in the interbank market on Monday last and closed at 279.41 on Friday, registering a rise of 0.06 percent week-on-week. Overall, the local unit has improved by Rs7.62 during the previous 12 weeks. Out of the last 37 sessions, the rupee has surged in 33 sessions and lowered in three sessions, while it remained unchanged in one session.
The rupee improved by Rs8.88 during the current fiscal year 2023-24 and Rs2.45 in the current year. The rupee improved by Rs2.36 in January, after gaining Rs3.31 in December. The local unit shed Rs3.69 against the US dollar in November after gaining Rs6.26 (+2.23 percent) against the greenback in the month of October.
However, the local unit lost traction against the greenback in the open market and closed the week in the range of Rs281.7 per dollar against Rs281.17 during the previous week, according to the Exchange Companies Association of Pakistan. With this, the difference between rupee-dollar exchange rates in the inter-bank and open markets widened to Rs2.29 (0.81 percent). The gap remained well below the ceiling of 1.25 percent recommended by the International Monetary Fund (IMF). Market talk suggests that the rupee will remain stable around current levels until the general elections scheduled for February 8, 2024. The rupee-dollar exchange rate will take cue for future direction from the new government’s economic policies.
The recent positivity arises from improved macroeconomic conditions in the form of increased liquidity in the foreign exchange market due to tighter enforcement of regulations, a shrinking money supply, a balance of payments surplus on account of low import demand, and a moratorium on Chinese debt repayments.
Meanwhile, the SBP said on Thursday that the country’s total liquid foreign reserves fell by $79 million during the last week. According to SBP, total liquid foreign reserves held by the country stood at $13.262 billion as of January 26, 2024 compared to $13.341 billion as on January 19, 2024. During the week under review, the SBP’s reserves decreased by $54 million to $8.217 billion due to debt repayments. Net foreign reserves held by the commercial banks also declined by $25 million to $5.046 billion at the end of last week.
In a related development, caretaker Federal Minister for Finance, Revenue and Economic Affairs Dr Shamshad Akhtar said that the economy has stabilized due to proactive measures taken by the interim setup. In a press briefing on Saturday, she said the interim setup inherited the issue related to the exchange rate.